WISH we could house hack, but with kids...SFH options?

Question

Newbie here, hope you all are well!

The husband and I have been reading, studying and listening on the BP community for around a year and are beyond grateful for this community and the wealth of knowledge.

Due to credit and income issues, we have lived in a 2BR apartment for years with our two daughters. I also have 2 precious stepchildren from hubby's previous relationship that don't live with us but stay over often. We have now gotten our finances, credit, and cash to the point of acquiring our first property in the next couple of months. We feel we are also to the point that the kids need a yard, and freedom to move about without disturbing neighbors under us, a pet (0 tolerance for pets here), more room for our other two staying over...we want our first investment property to be a single family home valued at $70-80K that we rehab, live in for at least a year and flip later. We have our eye on a few in our area.

With all the buzz (and obvious financial benefits) about the house hacking strategy, I WISH we could house hack our way into real estate investing. However, given our kids and situation, a single family home appears to be the most logical option. Are there any sort of "hybrid" house hack/live in flip options available if we purchase a SFH with FHA/VA etc.? For example I know there cannot be a "lease" on either of the rooms with these types of financing, but can we AirBNB them for longer terms with friends or family...LOL, I am trying to get creative!

Thomas S. · Answer

Purchase a duplex and live in one side rent the other. Buy one that requires renovation, do the side you live in, up it's value and move to the other side and do the same. When done you have forced appreciation, increased the rents and you do the same again with another duplex.

Set your priorities, family or investing and family. Compromise now and reap the rewards later. Kids don't really care.

A SFH is a personal life style choice not a investment and in the end probably not going to achieve what you want financially.

Andrea F. · Answer

Thank you @Nicole W. and every one else who provided input. I think we have our strategy nailed down at this point. I will update here soon.

Nicole A. · Answer

Andrea F. I could be wrong, but I don't think it'd necessarily be a zoning issue by making your basement a rental. People rent out their basements all the time. You wouldn't be changing the structure of your house. Simply put a lock on the door that leads to the upstairs/main level so they do not have access to your part of the house. There might be small requirements. For instance, I must have smoke detectors in several areas if renting out part of my house.

Renting out part of your house gives you some other benefits besides income. At tax time, you can write off a portion of your maintenance/repairs! Good stuff!

You'd, of course, need to plan for things like laundry being on the main level and deciding if the basement will have a kitchenette or not. Jump on Craigslist and see if others in your general area are renting basements out. See what they offer and monthly cost.

Oh, and I say this a lot, but, know your area rental laws *before* you become a landlord!

Jon Crosby · Answer

Andrea F. gave you which would be ideal (although maybe hard to find), you could also look for lease option arrangement or seller financing options to 'make your own terms', so to speak on the deal until you eventually qualify for conventional lending (lots of info online on both of those strategies and in BP community).

I would be cautious about your plan for 'long term' AirBNB' with family as that sounds dangerously close to mortgage fraud which would not be good for your future real estate needs.

Best of luck!

~Jon

Andrea F. · Answer

@Thomas S. thank you for the reality check, I suppose kids don't really care and the rewards later in their lives are worth more than some immediate sacrifices of wants.

@Jon Crosby FHA/VA is the level our credit and cash reserves are at. I have read so much about the benefits of FHA/VA etc. due to the low down payment, great terms, however, would you recommend getting in the position to qualify for conventional or perhaps even a commercial loan instead?

@John Underwood thank you for the suggestion, I would love to learn more about "converting" a home with a basement for future projects. I do know I will have to look at zoning, etc for such an endeavor.

John Underwood · Answer

I have seen on HGTV show income property, where they buy a house that has a basement with separate entrance and rehab the top or bottom for a long term tenant. You could do it for short term rental too.

You might get a great long term quiet tenant that would be less stress than people coming to town to party every weekend. The TV show creates rent close to the mortgage, sometime equal or a little more than the mortgage. They are doing a 30 to 40k rehab on the rental space. The trick would be buying at the right price and in a good area to make the numbers work.

WISH we could house hack, but with kids...SFH options?

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